Another interesting niche is forming in the specialist lending market – DIY developing. In the past development finance was generally unavailable to inexperienced developers or for small projects. Now new regulated products are coming to market which are specifically aimed at those DIY developers who want to build a house in their back garden and sell it. Similarly it’s available to those who are inexperienced in property development but want to step in to the sector with the help of an experienced builder.
It’s news to no one that we’re in the midst of a housing crisis and more houses are needed whether that be hundreds on a huge estate by a well known developer or one or two by a bespoke firm – every little helps!
Ground up developments including self build, barn conversions and basement excavations can all be financed with a regulated loan and getting planning consent to build at the end of the garden has probably never been easier.
And if you move in to the new house there should be no CGT or income tax to pay as it’s your client’s primary residence.
If you have any clients who fancy themselves as a DIY developer this is the one for them and there are lenders willing to help.
2 out of 3 borrowers get a lower rate than our representative example of a regulated secured loan below:
Mortgages and Remortgages
£80,000 over 240 months at an APRC OF 4.3% and a discounted variable annual interest rate for two years of 2.12% at £408.99 per month followed by 36 payments of £475.59 and 180 payments of £509.44. The total charge for credit is £39,873 which includes a £995 broker / processing fee and £125 application fee. Total repayable £119,873.
Secured / Second Charge Loans
£63,000 over 228 months at an APRC OF 6.1% and an annual interest rate of 5.39% (Fixed for five years – variable thereafter) would be £463.09 per month, total charge for credit is £42,584.52 which includes a £2,690 broker / processing fee. Total repayable £105,584.52.
£4,000 over 36 months at an APR OF 49.9% (fixed) and an annual interest rate of 49.9% would be £216.21, total charge for credit is £3,783.56. Total repayable £7,783.56.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
If you have been introduced to Promise Money by a third party / affiliate, Promise may pay them a share of any fees or commission it earns. Written terms available on request. Loans are subject to affordability status and available to UK residents aged 18 or over. Promise Money is a trading style of Promise Solutions Ltd. Promise Solutions is a broker offering products which represent the whole of the specialist second mortgage market and is authorised and regulated by the Financial Conduct Authority – Number 681423.
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